Concurrent delay remains a knotty issue open to various interpretations, as highlighted by the recent case of Saga Cruises BDF Ltd v Fincantieri SPA [2016].

In practice, substantive concurrency is relatively rare as delays commonly tend to be sequential rather than concurrent. The approach commonly taken is that, in order to have true concurrency, there must be two causes of delay operating at the same time and affecting the critical path of the works; one of which is an employer risk event and the other a contractor risk event.

When the situation does arise, subject to the terms of the particular contract, the Henry Boot v Malmaison [1999] principle is widely adopted as the applicable outcome in that the contractor will get an extension of time but no associated additional costs.

Often, the pivotal issue relates to the problem of establishing whether or not true concurrency exists - this issue arose in Saga Cruises (Saga) v Fincantieri [2016].

Background

The dispute arose out of a contract for dry docking, repair & refurbishment between Saga (owners of a cruise ship, the Saga Sapphire) and Fincantieri, one of the largest shipbuilding companies in the world. The works were carried out at Fincantieri's yard in Palermo.

The works were initially scheduled to complete by 17 February 2012, but this date was extended by agreement of the parties until 2 March 2012. Ultimately however, due to further delays, the Saga Sapphire was not re-delivered to the owners until 16 March 2012.

As part of its case, Saga claimed liquidated damages, capped at a maximum of €770,000 in accordance with an agreement at the time of re-delivery of the Saga Sapphire.

Fincantieri contended that completion had actually been delayed by two events concurrently: one for which Fincantieri was responsible and one for which Saga was responsible; as a result it argued, no liability for liquidated damages arose.

The substantive argument (in relation to this head of claim) surrounded the issue of liquidated damages; it centred on whether or not various events were truly concurrent and how concurrency should be established.

The decision

In her analysis, the Judge, Ms Sara Cockerill QC sitting as a Deputy High Court Judge, considered relevant case law and concluded as follows in terms of concurrency:

"...unless there is a concurrency actually affecting the completion date as then scheduled the contractor cannot claim the benefit of it. Causation in fact must be proved based on the situation at the time as regards delay".

The court's decision was that delay had first arisen as a result of events for which Fincantieri was responsible and, although matters for which Saga was responsible may have arisen subsequently, such matters were of no causative effect and therefore did not count as concurrent delays. As a result Saga was entitled to recover liquidated damages for delay up to the amount of the cap, as claimed. Effectively, the Judge decided that there was no factual concurrency to displace the entitlement to liquidated damages.

The decision serves to highlight the potential difficulties arising from arguments relating to allegedly concurrent delay. Each case will vary of course, depending on the specific wording of the contract to be considered but there are some steps you can take to minimise your exposure to costly disputes.

Practical tips

  1. Know the contract

    Exposures and obligations will vary, according to the way the contract has been drafted. In order to be able to manage risks effectively, you need to understand for example, how any liquidated damages provisions operate, whether there are any relevant notice provisions etc.

    In the Saga-Fincantieri contract, one clause required Fincantieri to give immediate notice to Saga if "the carrying out of the Other Works interferes with...the Works...such that the undertaking of the Works is hindered or delayed...". In the end, the giving (or not) of notice in accordance with this clause was not a substantive issue to be determined by the court but the court indicated that the absence of such a notice would not have prevented any reliance on a contention of concurrent delay.

    In another contract, worded differently, such a notice (or its absence) could be determinative and if you don't know about it, you can't plan for it.

  2. Keep accurate records

    If you retain accurate and contemporaneous records of correspondence, discussions and events, it will be substantially easier to support your contentions in terms of delay and relative responsibilities for that delay, if necessary. Poor record keeping simply confuses issues if a dispute arises, tending to lead to wasted costs and delay in addition to the potential failure in relation to the claim.

  3. Consider "re-positioning" agreements

    In this dispute, Saga and Fincantieri entered into an agreement at the time of redelivery effectively varying the terms of the contract - referred to as the Protocol. In the Protocol, the parties agreed (amongst other provisions) to cap the amount of liquidated damages that could be claimed by Saga with the effect that although in its claim, it relied on delay between 2 and 16 March 2012, quantum on this issue was limited to €770,000, equivalent to only 4.3 days of delay.

    An earlier "deal" prior to completion had agreed a postponement of the Scheduled Completion Date and had additionally limited Fincantieri's right to claim an extension of time by reason of force majeure up to and including 16 February 2012.

    The point is clear - whilst such deals will not always be appropriate and need to be recorded cautiously (in order to be binding), an opportunity may arise to cap exposure in this way, so reducing risks and disputes in due course.

The debate relating to the concurrency or not of particular events is bound to rumble on - in the meantime, focus on the practical steps you can take to minimise exposure.